Anecdotes and Advice for High Growth

Replacing The CEO

The vast majority of early stage companies will companies replace the CEO in the first 2-3 years.

A person or group peers starts with an idea and turns a spark into a flame. Once that flame is s going they don’t want to let it die. They often conclude that a more seasoned, well connected, well rounded CEO will attract money, partners and revenues, taking the company to “The Next Level“.

All this will hopefully help the company grow in the right ways and produce cash flow. Cash allows small companies to fulfill growth and other objectives; cash generated organically helps do this without giving up ownership and control.

But t’s a bit more complicated. Introducing a new leader, whether internal or external, voluntarily or forced, s a delicate process. I’ve been the incoming CEO a few times, and found that acceptance happens quickly or usually not at all. Most startups have no experience doing this, are not prepared, and cause their company damage by not doing this correctly – they accidentally blow out the flame.

There are some basic guidelines that can help make the new CEO stick.

1. Choose the New CEO Very Carefully. This is where most startups make the wrong choice. They base their choice on the wrong criteria and/or a limited pool of candidates, or peer pressure, or using one of the investors, etc. Be methodical and objective here. Engage experts if possible.

2. Put The Egos Away – mMake sure everyone is on board and understands that the new CEO is the right answer, including the outgoing CEO. Outgoing CEOs who can’t let go are one of the top reasons early stage companies fail at this process.

3. No Sacred Cows – Allow the new CEO to make the changes he/she wants mmediately. This requires trust on the part of the extant management team but you must let them manage the whole puzzle, not just parts of it (see #1).

f these things are done correctly the succession process can actually be a great experience for all involved. If you would like to discuss further please contact me. @tomnora